Bitcoin Price Analysis: BTC Fails at $40K, Is the Bullish Correction Over?
After an impressive rebound following the retest of the $30K area on Sunday, bitcoin reached $40K earlier today. However, over the past hours, the primary cryptocurrency is losing momentum.
The question is whether this huge $10K recovery will turn into a “dead-cat bounce,” or bitcoin will able to penetrate through the heavy resistance zone of $40-42K?
The good news is that, as of now, bitcoin’s price is still up by a total of 18% from Sunday’s low.
Quick recap: The primary cryptocurrency dipped as low as $31,100 on Sunday but managed to close the daily candle at support around $34,760 (downside 1.414 Fib Extension).
From there, BTC rebounded almost 15% yesterday to reach a high of $39,960 on Bitstamp. This allowed it to break toward the upside of a descending price channel, as mentioned here yesterday, which could act as the first signal that a short-term recovery is on the table.
Additionally, it seems that the bullish “W” formation with the double bottom around the $30-$31K area is continuing to play out (unless the latter price zone will get broken down).
Despite the above, BTC had so far failed to breach the solid resistance at $40-$42K, which provided strong support (now resistance) previously. As you probably know, strong support turns into strong resistance after being broken.
Also in this resistance: the 200-day moving average line, which is now sitting at $40.5K. Over the past hours, we saw two rejections of the $40K resistance.
After the second attempt, bitcoin quickly plunged towards the .786 Fib support around $36,750.
BTC Price Support and Resistance Levels to Watch
Key Support Levels: $36,750 – $36,400, $34,760, $33,520, $32,465, $31,100.
Key Resistance Levels: $40 – $40.5K, $41,350, $42,000, $44,750, $46,815.
Looking ahead, the first resistance lies at $40,000 (200-day MA at $40.5K). This is followed by $41,350 (bearish .382 Fib) and $42,000 (Jan 2021 highs). If the buyers break above the zone, we can expect a quick move to the further resistance zone at $44,750, $46,815 (100-day MA), and $48,310 (bearish .618 Fib).
On the other side, the first support lies at $36,750 (.786 Fib). This is followed by $36,400 (1-hour’s MA-50) $34,760 (downside 1.414 Fib Extension), $33,520, $32,465, and $31,100 (Sunday’s low).
As mentioned here yesterday, the bullish divergence on the daily timeframes RSI has played out nicely, while the RSI created a higher low whereas the price had seen a lower low. The RSI is still in the bearish territory as it sits beneath the midline, but the ascent shows that the bearish momentum is starting to fade quickly.
Bitstamp BTC/USD Daily Chart
Bitstamp BTC/USD 4-Hour Chart
Binance Futures 50 USDT FREE Voucher: Use this link to register & get 10% off fees and 50 USDT when trading 500 USDT (limited offer).
PrimeXBT Special Offer: Use this link to register & enter POTATO50 code to get 50% free bonus on any deposit up to 1 BTC.
Disclaimer: Information found on CryptoPotato is those of writers quoted. It does not represent the opinions of CryptoPotato on whether to buy, sell, or hold any investments. You are advised to conduct your own research before making any investment decisions. Use provided information at your own risk. See Disclaimer for more information.
Cryptocurrency charts by TradingView.